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tv   Counting the Cost 2017 Ep 44  Al Jazeera  November 6, 2017 7:32pm-8:01pm AST

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says he quit the role because he fears an assassination attempt against him iran and its ally the lebanon based shia group hezbollah are accusing saudi arabia of being behind the move. saudi arabia is want to run it will not tolerate any infringement on its national security after a ballistic missile targeted the capital riyadh on saturday resellers fired by iran backed rebels from inside yemen and was aimed at riyadh's international airport documents leaked to a german newspaper appear to show that thousands of the world's richest people have previously unknown investments held in offshore companies donald trump's secretary of commerce wilbur ross is reportedly among them is alleged to have ties to russian businesses linked to people close to president vladimir putin rosser said there is nothing improper about the links. a former politician and businessman in kenya is challenging the results of last month's presidential run senior position figure john haroon wow as far as a petition in the supreme court great one you can catch up any time with our
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website address for that is there dot com and you can watch us by clicking on the live icon that's all for now counting the cost is next by finesse. with . with. with. has him seek and this is counting the cost on al-jazeera your weekly look at the world of business and economics this week twenty thirty and beyond we take a look at saudi arabia's vision for economic reform starting with the ram. also this week time for
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a rise britain central bank hikes interest rates for the first time in. turkey's economy is on the up but there are challenges ahead we'll bring you a special report from istanbul. with the gulf nations need to branch out and kick their oil dependency diversify says the international monetary fund that warning comes a saudi arabia continues to work out how to sell around five percent of its state run oil producers it's a deal that could raise more than one hundred billion dollars the plan is at the heart of an ambitious economic reform program which includes a new five hundred billion dollar megacity near the red sea it's hoped the extra money from the sale will make saudi arabia less reliance on the black gold in the long term all of this comes against a backdrop of economic challenges at home it's currently in a recession after shrinking in two consecutive quarters for the first time since two thousand and nine growth this year is expected to be close to zero saudi
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arabia's budget deficit currently stands at nine point three percent of gross domestic product it has suffered due to recent low oil prices and unemployment edged up in the second. quarter to nearly thirteen percent although that number is far higher under twenty nine year olds with joining us now from london is a ham camel am is the head of the middle east and north africa research team at you raise you good good to have you with us so how is saudi arabia's vision twenty thirty looking right now is it realistic i think it's the beginning and. aspirational more than anything and they're trying to implement key parts of it i think with any long term plan especially with this time horizon twenty thirty big parts of it will not be implemented there are meant to drive change more than anything else and i think we're heading in that direction it's fundamentally changing of the kingdom structure a political social structure and
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a movement into something that's much more viable fiscally and even regionally but there are some big challenges at the moment when we're talking about sour economy high unemployment. it's officially in recession right now all prices and haven't completely cooperated the way the way they would like how do you see there are all of those challenges affecting how saudi arabia goes forward so i think that the short term challenges are very linked to the oil prices and i think we're beginning to get some form of a recovery there not sufficient to rebalance the economy or get to the fiscal rebalancing but we're probably going to have there by twenty twenty twenty to twenty one all of the gulf countries are suffering from oil prices i don't think that there is a short term solution to this issue they're realistic option and i think that's where we're heading towards is more austerity to get to
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a position where saudi arabia is able to balance the books but at the same time fundamentally the long term structural issue is unemployment finding jobs for saudis restructuring the economy so the. not only state revenues are not derived from oil but the economy has an engine that is not oil based or not energy base and i think that's why we have projects like new york. that's why we're getting liberalization of the stock exchange and that's why we're getting some structural reforms to get the private sector to play a bigger part in of the economy this is practically the end of the saudi state dictating all economic activity much more liberal saudi arabia isn't it also about the need for cash and particularly with the saudi aramco i.p.o. sure i think iran cause i.p.o. is actually linked to the issue of finding sufficient or additional cash to invest
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in local local business ventures and i think that's particularly the plan in terms of fiscal needs i don't think that the money from the aramco will go directly to fund the budget i think that they're borrowing enough locally and internationally oil prices have rebounded to a level where they don't need a large amount of cash or a cash injection but it's domestic investment that's important for saudi arabia right now finding ways to stimulate the economy and getting the public investment fund basically their sovereign wealth fund to invest in projects to revive the saudi economy or shifted towards something less based on energy and that diversification and drive is why the state needs to sell that piece of iran because there's also a number of unanswered questions with regard to saudi saudi aramco. how how it's going to be listed exactly. how big this stake will be who gets to take
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part transparency is an issue i mean how is the saudi government addressing all of those concerns the local listing is quite easy and it's not problematic even from the regulatory prospect. the question then becomes in regards to an international segment or international sale and i think that if we do get a private placement or private sale to some investors then it will probably delay an international listing i don't think that saudi arabia is completely going to abandon listing in an international stock exchange but certainly a private sale to some investors or some sovereign sovereign wealth fund would delay that the challenge obviously is sequencing all of these things it's not easy and the clarity on what they're what they're trying to do have think has been quite problematic recently talking g.c.c. though there's also this plan for a g.c.c.
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wide value added tax a sales tax on all on all goods. how is that going to affect things i mean is there a concern that that's going to dampen growth absolutely i think any effort to really expand the revenue base find new sources of income in the g.c.c. economies at a time when you have economic slowdown is going to be difficult challenging and it's going to present real problems for these governments however it's it's something that they have to pursue absent some form of fiscal reform they will face more acute long term challenges so i think that there was agreement to move towards a t twenty eighteen because of these fundamentals oil prices just will not rise to a level where the g.c.c. budgets or the all form of g.c.c. budgets can be sustained so everyone is perfect pursuing in one way or another
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fiscal reform and that involves expanding the revenue base but essentially this is all about saudi arabia trying to wean itself off of its dependence on oil do you think ultimately it's going to be able to do that. i think sunning pieces of aramco is an easy solution and i don't think they'll confront many problems ahead of that the problem will be in terms of where to list how much value they get for aramco but since aramco contributes a vast majority of the state's income selling a portion of diversifying solves a piece of the problem so fiscal rebalancing getting the economy or government revenues to move away from oil is an easy part of the equation getting saudi arabia's economy in proper i actually employees actual saudis to diversify is a more daunting challenge over here i have cameron good to speak with now the bank of england has raised its key interest rate for the first time in a decade the point two five percent hike was widely expected british policymakers
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are trying to dampen inflation which has been taking steadily higher but with concerns over the country's brigs it dented economy which dilemmas in the current landscape might now be worrying the banks gov the most. with joining us now to talk more about that from london is jeremy jeremy is a chief economist and head of currency strategy of world first in the u.k. thanks very much for being with us so what's behind this decision and why now what's behind this decision is inflation simply put inflation is running here in the u.k. the highest level in five in five years so the bank of england central mandate is price stability to try and keep inflation to its august of two percent were above that and the interest rate hike will dampen inflationary dampen inflationary pressures but also i think there's a credibility issue around the bank of england they cut interest rates post the post the referendum vote that we had here in the u.k.
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last year so it's a reversal of that say in the immediate near term fears that could have hit the u.k. economy as we decided to leave the european union haven't really come to pass so therefore that emergency accommodation is no longer needed so what's this going to mean for british people then particularly homeowners you've got monthly mortgage payments well the average more if you took the average mortgage around two hundred thousand pounds which is about the average mortgage here in the u.k. you'd be looking at twenty five basis points out and about thirty pounds to your monthly repayments so in the grand scheme of things that doesn't sound like doesn't sound like much but if you're if the bank of england is looking at not just one interest rate hike in maybe two or three over the course the next couple years of say three will take it closer to one hundred pounds if you get to about one hundred pounds that's about five percent of the average take home wage now here in the u.k. . the majority of our economy is based around consumption is based around spending
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it's based around the high street and why why people going out there and flashing the cash so if people are having to spend more money on servicing debts be that credit card debt house debt card debt there's less for them to spend elsewhere and you mentioned in. place in earlier as a concern so is consumer debt that's on the rise again the bank of england. also expressing concern about that how how does that figure into their thinking while they don't want to burst the bubble themselves i mean consumer debt has expanded pretty dramatically over the course of the past couple of years the spending that has kept the u.k. economy going has come from either consumers running down their savings accounts or putting things on plastic so we have to sit there and say is the retail sales bubble going to burst if people can't spend anything anymore because they're worried about the worried about the repayments the gram the vast majority of
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spending however is done on fixed rate debt so this interest rate rise that we saw from the bank of england won't immediately affect that but at the margin it may mean that some people who may were thinking about maybe think about taking on more debt may stop them and stop them in their tracks another question the people asking as well as after this when's is there going to be another rate rise and when and the bank of england in nest statement seemed to be cautious of the bad about that implying that there might not be another rate rise until perhaps late next year and then another one after that in in twenty twenty perhaps what's your take on that yeah so this we think this was a hike really in name only that there was this was twenty five basis points but if you look at the reaction of the pound for example we're back to levels that we last saw pretty anyone really talking about an interest rate hike in november so the market is pretty seriously discounted away the likelihood that we see further interest rate increases over the course of two thousand and eighteen and maybe two
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thousand and nineteen the bank of england is now very very data dependent it will be looking at the data the inflation wage retail sales growth trade all of this coming together of forming a picture about whether the u.k. economy a needs and interest rates. b. is also strong enough to take another interest rates rise we believe that as we get closer to the twenty nineteen deadline the article fifty deadline on breaks it's the u.k. economy data will continue to remain quite poor and therefore the bank of in the will not be able to raise interest rates at the when they want so jeremy koch thanks very much for being with us thank you i still to come on counting the cost talking turkey we dig a bit deeper into the country strong recovery this year. the cleanup of a contaminated fishing community in nigeria has finally begun nearly ten years after two or spills shell pipelines had corroded and the result saw millions of
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liters of crude oil poor into creeks and swarms around the need. of many trees reports. a devastated many groups who are being prepared for restoration in nigeria's delta this used to be the breeding ground for fish and other marine creatures for months now and these workers have been clearing sludge and other contaminants it's about trying to mop up that oil which is which is free within the environment within the mangroves on the water but i think more important than that phase one is about quantifying and designing the more robust phase two cleanup which will be about physically agitating cleaning flushing and where necessary exits you treatment of the sediments might was part of the united nations environment team that reported on the extent of the pollution progress is
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slow. after removing b. top soil and the debris walkers try to wash the oil from the mud and riverbed then the potent all it is trapped by the booms installed right over there as the oil float the process will then move up river this needs to be defeated in some four thousand mongrel in one of the worst affected communities and oil rich niger delta . one out of focus is on cleaning and restoring only one thousand hectares in bordeaux after four years of difficult engagement with the local community years of inaction by all companies and government in addition to more spills only made the devastation worse but the bigger cleanup is still at the planning stage there's a clear determination to make this work the impact to a clean up is not just from the spills we're talking about there's been lots of illegal activities around us but you know and all that and i was also one of the biggest concerns we have the illegal activities he's talking about include some of
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the pipelines and the theft of oil and that is still happening at the construction of five huge reservoirs in qatar almost complete once finished they'll be among the world's largest reservoirs with a capacity of some one hundred million gallons of water each but is this project sustainable manoli visited the site. construction workers trickle through this large pool but in less than a year it will flow with water. these workers are putting the finishing touches to one of the largest reservoirs at the built. taking a step outside reveals the truth of this four point seven billion dollar project it's so big engineers couldn't find cranes that could stretch the length of it it's a reservoir it's going to. one hundred million of water. there are still
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construction so. this. with its current of the structure cutter residents would go thirsty within forty eight hours if the water processing plants were not operating a big issue for a population that's been growing in size the country strain is ours desert meaning there's no new the water from rivers and lakes seawater is converted to drinking water through to to sell the nation plants the five reservoirs would be connected to those plants almost tripling the supply now between two and a half meters in diameter the water is pumped or hair and sent to the world's largest water reservoir to give you an idea of scale take the largest water reservoir for nine of the world's biggest cities you can put them all in there and still have room for a major sporting event but it's a project really sustainable. some are concerned with the deceleration process is
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energy intensive and environmentally damaging however engineers a confident it won't be a problem i see how it impacts on the whole we are doing it we're reducing something. because what we're doing is believing movies like movies and music at the moment rather than the movie generate. an abundance of water in the desert is no longer just a pipe dream for carter's residence these installations a built to last century. u.s. president donald trump has confirmed jerome powell is his choice to lead the federal reserve powers been a member of the bank's board since two thousand and twelve places janet yellen when her term expires in february. facebook has told senators in washington a russian group may have reached as many as one hundred twenty six million users juror and after the twenty sixteen u.s. election
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a lawyer for the social media giant admitted it should have been more vigilant representatives from google and twitter say they also have evidence of russian backed posts trying to influence votes. ryanair says it's still on course to post record annual profits that's despite the pilot shortage that sort cancel twenty thousand flights dublin based carrier says net profit rose eleven percent is first time after september chief executive michael o'leary believes he can still raise pay for pilots and retain a price advantage over rivals after the staff wrote a crisis that led to a sliding quarterly earnings. outside his economic growth is one of the fastest among the world's twenty largest economies its gross domestic product recently top five percent something only bettered by china and india but it's also dealing with high inflation and a fall in lira is cinema in istanbul. bridges undersea tunnels power plants pipelines a third airport and
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a canal for stumble total cost at least one hundred billion dollars turkey is attempting to expand its economy and political significance in the region with fifteen make up projects taking advantage of its location at the crossroads of europe asia and the middle east some of these structures have already been completed through public and private partnerships national and international contract is due the building backed by an assurance from the treasury despite the government guarantees financing is still at chalon. in a politically and economically fragile global atmosphere apart before the ruling government it was difficult for turkey to find loans now we don't go to any international agency we have no budget deficit if this trend continues it will be much easier now. after the failed coup in turkey in july last year in order to avoid a recession the government provided more than sixty billion dollars of incentives
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to small and medium sized enterprises or as a means economic say this was a major reason for the latest surge in growth. reason centers have stimulated the economy and reduced unemployment but it has serious burden on the budget deficit if turkish economy loses its anka the fiscal discipline the growth rate may go down to four next year but there are some concerns at the impact the makeup project could have on the budget this is the third bridge that connects europe and asia it was designed to reduce the traffic congestion in a stumble and for a wider link between two other made up projects the thirty year port and the canal but because the tolls are expensive many drivers still choose the crowded but cheaper routes and old john owns a coffee house in a stumble suburb he worries that if the new impress structure doesn't generate enough income then the government will have to find funds to pay the companies that
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built them. if you don't know we are citizen who paid their taxes regularly i don't even have a car it's not lies that i have to pay for the cars which don't cross the bridge. there are many domestic and international conflicts that could come into play for turkey but for the moment it's trying to stick with strong economic indicators whether grafter sustainable given the high public spending is the question still waiting an answer three namco solo for counting the cost stumble we're joining us now from istanbul is more that you like what that is a professor of economics at istanbul commerce university by serving with us now i want to ask you first of all broadly speaking what do you put this economic growth in turkey down to well there are a number of reasons as you know last year we had some political problems in turkey so there is kind of a base effect which takes this years to further level secondly there is the
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positive effect of turkish exports which contributed significantly to the growth and other one is the tax policies at the beginning of the year which was in the way of reducing taxes for automobiles as well as white appliances. and lastly there was another major factor which was in the first quarter or so there was a positive stimulus from government expenditures which pushed the economy a little bit and the outcome is that now turkish growth is the third of issue in the world for this for the first of of this year. what talk is also trying to deal with double digit inflation at the moment it's projected around nine or ten percent until the end of the year what's behind that and how can it be brought down there are basically two reasons for it number one is is a very let's say first growing economy which drives inflation high or at least it.
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prevents it to go down and secondly there was from last year and of last year there was the depreciation of the turkish lira. which now is starting to push the prices up but actually by the end of the year we expect that there will be some small despite although not a very strong one and probably in the in the first half of the next year we will see further reduction in the inflation rates well there's a number of what are called mega projects going on in turkey right now tunnels bridges airports all kinds of construction going on how is all that tied into the economy and will it be done on time well yes you are very right that turkey is like a construction site right now in the last ten fifteen years it has been like that one reason for that was that turkey is obviously a very large
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a country in terms of territory it needs a lot of infrastructure in the past decades that demand for infrastructure investment could not be met properly. and adequately partly because of budgetary reasons in the last ten fifteen years the government started to benefit from the appropriate transportation type private sector financed. modes of let's say investment in infrastructure they are on time for example that the third bridge which is considered one of the larger mega projects was you know curated before the scheduled time what you like thanks for being with us. welcome and that is our show for this week get in touch with us by tweeting me at has him seeker and do you use the hash tag a.j.c. to see when you do or drop us an e-mail counting the cost at al-jazeera dot net is our address but there's more for you on line at al-jazeera dot com slash c.t.c.
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that will take you straight to our page individual of course links and entire episodes from the catch up on. that is it for this edition of counting the cost and has a secret from the whole team thanks for joining us the news on al-jazeera is next. everything you do is being analyzed it's being weighed and it's being measured that's what intelligence agencies are they are tossed to do things in secret that are unlawful or politically embarrassing all of the colleagues that i knew chose to retire from the n.s.a. they could not stand by and see all the work that they had done being used for mass
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surveillance digital dissidents at this time on al-jazeera. germany is hosting this year's climate talks president trump holds united states out of the powers agreements what enough of the global effort to tackle climate change in that fanaticism live reports from the climate conference in bonn and from the front lines of global warming climate s.o.s. aunt jessie at our. i pursued and i just did what i thought was the right day. possibly i hailed a hero for chasing the texas church gunman as police give details on a possible motive.


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